Car industry gives manufacturing a boost

Author: By Russell Lynch, PA

Manufacturing output rose 0.4% over the month – the biggest increase since
January 2008, the Office for National Statistics (ONS) said.

A 13.5% jump in car manufacturing over the month – the best performance since
January 2007 – was a significant factor behind the rise, the ONS

The car industry has been crippled by a drought in consumer finance for car
loans and slumping demand in recession – prompting aid from several
governments such as scrappage incentives to replace old cars.

During the three months to June, car manufacturing output rose 10.1%, although
this is still almost 43% below the same period last year.

As well as an overall 4.1% rise in transport equipment industries in June,
electrical and optical product manufacturers saw a 2.5% rise, offsetting a
3.6% monthly decline in the chemicals sector.

Overall industrial production – including mining and quarrying and output from
utilities – was up 0.5% over the month, although it declined 0.6% between
April and June compared with the first quarter of the year.

Economists said the figures showed manufacturing was past the worst after more
than a year of contraction.

The data will also be weighed by rate-setters on the Monetary Policy Committee
who will decide tomorrow whether to give further aid to the economy through
an increase in its quantitative easing (QE) programme, which stands at £125
billion so far.

Vicky Redwood at Capital Economics said the figures were “encouraging stuff”,
but warned: “The recovery is still in its early stages, and given the MPC’s
caution about these ‘green shoots’, we still think that more QE will be
announced tomorrow.”

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